Up to 2.3 million homeowners aged 55 and over expect to sell their homes to raise finance, research from Prudential has shown.
The study reveals that 33% of homeowners over the age of 55 plan to downsize their homes, raising an average of £85,300 each. Nearly one in 10 (9%) expects to raise £200,000 or more.
One in five expects to sell and buy another property in the next five years.
Respondents were asked about the reasons for wanting to downsize their home:
- 60% said they wanted the convenience of running a smaller house
- 32% say the main reason is to raise money
- 21% want to cut the expenses of running a home.
When asked how they plan to spend the equity:
- 42% said they plan to use it on a one-off purchase
- 41% said they will save or invest some of it
- 29% will put some of the money into their pension pots
- 12% will use some of the money to help their children buy a house
- 15% said they will use some of the money to help their children with other financial issues.
However, the survey also found that 28% of over-55 homeowners are likely to be deterred from moving house by the costs involved.
Vince Smith-Hughes, retirement income expert at Prudential, said:
“Homeowners who have been lucky enough to gain from the long-term strength of the housing market should exercise caution if they are banking on downsizing to be the magic wand that provides a decent retirement income. In some cases the amounts of cash realised can be lower than expected and the cost of moving house should not be underestimated.
“The best way to secure your desired level of retirement income is to save as much as possible in your working life.”